My guest this week is a man whose business is tracking and tracing and finding out exactly where products and their component parts come from.
Today I'm talking to Shameek Ghosh. He is cofounder and CEO of TrustTrace, an organisation specialising in supply chain traceability and integrity. We're going to talk specifically about the fashion industry, an industry which has come under criticism not only from environmental activists, but from a number of other quarters as well, because it's said that the fashion industry alone is responsible for 10% of global carbon emissions. It accounts for 20% of global wastewater, and it's the second largest consumer of freshwater. It's also the second biggest polluter after the oil industry. And there are all other questions as well about sources of material, labour conditions in manufacturing, the energy and pollution in manufacturing, and ultimately the waste. So sustainable fashion, Shameek, what can you at Trust Trace do to ensure that sustainable fashion is indeed sustainable?
The Fashion Industry
Shameek Ghosh (01:08)
I think first, let's try to understand what is the challenge that fashion industry face, as you mentioned, while these are the consequences of lot of irresponsible production which is going on in the fashion industry. The fact also remains that most of the brands, the fashion brands, typically the brand of the clothes that we typically buy. Many of these brands do not know their supply chain really well. Fashion industry for the last three or four decades have actually been outsourcing production and which means that they only know their main supplier or the last direct supplier. They don't know the supply chain beyond that tier one supplier, which means that they do not know, they are not aware of the irresponsible practices which are followed in the lower tier supply chain. Also the direct supplier there. And to this, what we are doing is that we are bringing data. We are collecting data from tier one, tier two, up to tier seven suppliers. And then we are presenting it to the brands so that the brands or the top tier suppliers can take action towards the lower tier suppliers and improve their performance related to environmental, social and ethical aspects, as well as improve the percentage of sustainable materials that they are using in the product.
Long Supply Chains
Anthony Day (02:42)
So some of these supply chains, of course, are geographically very long. A lot of material comes in from the Far East. Do you actually have people on the ground who inspect and verify and certify that the production is, let's just say, ethical?
Shameek Ghosh (03:00)
So, yes, the fashion has got a very very long supply chain. In most of the cases, it starts from as far as Australia, New Zealand, travels to Asia, to Southern Europe or North America, and then ends up in some part of the world as a final product there. And to this, we are offering them a data platform. We do not intend to have people on the ground everywhere in the world, but we are located in some key nodes. So we are headquartered in Sweden, which allows us to cover the Europe and the Eastern Europe kind of region for production. We also have got a global centre in India. So we are covering that time zone, the Asian time zone and the Australian time zone very well and now we are in the mode of expanding into the US and which will allow us to cover the North America and the South America time. So also there. The fact of the fashion industry is that there are a lot of infrastructure that is existing in the fashion industry to collect the data. You have got NGOs, you have got audit agencies, you have got quality checkers spread across the globe.
Digitising Supply Chain
However, all of them are working in silos. Where we are coming in is that we are digitalising the complete supply chain and allowing people to do peer to peer reviews of the different aspects of the supply chain and this makes the supply chain much more efficient and also reduces the cost of compliance and cost of quality checks through our platform and that is how we are changing the industry here. It is sort of rewiring the house or rewiring the fashion supply chain in a way that it becomes much more efficient, much more transparent and much more sustainable.
Anthony Day (04:53)
I believe you're using blockchain and blockchain is known as one of the most secure systems, if not a totally secure system. But the data in the blockchain is only as good as the data that's actually put in. So it could actually to be highly secure false data. The key issue is the interface, the input. So you have presumably authorities, organisations which certify and those certificates are the things that you put into your blockchain to give the confidence to your clients that what they're buying or using is sustainable.
Reliability and Integrity of Data
Shameek Ghosh (05:39)
Yes, absolutely right, you are Anthony on that. So we use a plethora of technologies. We are a vertical B2B SaaS company. So we use best of breed technologies such as artificial intelligence, blockchain, OCR technologies, bots and all. What it does is that exactly. Blockchain is quite secure but of course, it cannot guarantee you that the data coming in is completely right. So that is why we use artificial intelligence where we run various algorithms to check the validity or the verify the data that is coming in. We also use OCR technology to digitise a lot of paper trail or paper certificates that are flowing out in the fashion industry, generally in the supply chain, across the globe. And through a couple of these means, we are able to ensure that the quality of data entering the system is better. At no point in time we can guarantee it is 100% correct. But I think we are able to bring in a deterrence in the platform because in the platform we are sharing the supplier data with multiple brands. And if we find a particular supplier is falsifying the data, we put a red flag and the sustainability rating goes down.
And this is visible to all the brands participating in this network. Thereby, there is a deterrence for the supplier not to falsify the data. At the same time, we also reward a supplier who is doing well. The supplier is investing into renewable energy, into water purification plant, ensuring that they have got regenerative practices in their facility. We improve their sustainability rating, thereby they get access to other brands who want to give them more business. Also, in some cases, when they are trying to make these changes, they may need access to capital. And we have got certain financial partners who also provide working capital or investments into these activities also. So there is a carrot and stick approach within the whole platform.
Anthony Day (08:05)
When a client comes to you for assistance with traceability, in the supply chain on your website you describe a four-stage process. Would you like to just take us through that?
Shameek Ghosh (08:16)
Sure, absolutely. So if you look at the fashion industry, as you rightly mentioned, it is a very large industry. It is almost a $3 trillion industry. And fashion is as old as I think maybe almost goes back to the early civilisation right there. So when you're dealing with an industry such as this, you are typically want to collect a lot of this data from the supply chain there. The challenge that the fashion industry currently have is that you have got certain sustainability leaders. You have got sustainability challenges and sustainability laggards there, right? The sustainability leaders are well ahead. They typically want to improve their performance, they have well, good control of the supply chain and they deal only with sustainable materials. Sustainability challengers are taking a leap forward. They have put sustainability as a key strategy and then they want to implement that and sustainability laggards are sort of just getting started. So the four stages that you see in our website or in the knowledge hub of our website is the first one is Supplier Mapping. So that is typically where initial companies are just getting started into sustainability will go. The second step is Product Traceability, which is to find out at a product level what is the specific supply chain I am using, right?
Because then you want to improve the performance of that product in terms of sustainability. Then the third aspect, and this is a significant leap from the second step, which is called Material Traceability, where you want to ensure that the complete material that is entering your supply chain is trusted material and sustainable material. And you are tracking to the point that it reaches your warehouse.
And the final stage is Sustainable Transformation. And this is the stage that typically Patagonias of the world will be there where they are at a very, very high level. But they still need to do a lot of work to maintain their positioning to be the sustainable leaders. So they continuously need a lot of data and it's such a dynamic world. You will come across new material innovations and you want to introduce that into supply chain. You will come across new ways of cutting carbon emissions. You will have to introduce that. So that is the stage at the fourth stages. So typically a Sustainability Laggard will start from the first stage and whereas the Sustainability Leader will be at the fourth stage, that is the complete evolution.
Fast Fashion and the Circular Economy
Anthony Day (11:01)
Right. Well, there are two things that I'd like to talk to you about now which I think could be linked. The one is fast fashion and the other is the circular economy. Now fast fashion may end up with products on the retail shelves which have come along a completely sustainable supply chain but they may be worn once and then thrown away. And that in itself is hardly sustainable. Unless of course you trace the waste, unless you extend the supply chain beyond the retailer and you're looking to see whether the waste can actually be recycled back into the circular economy in some way. Is that something which fits into your business model?
Shameek Ghosh (11:44)
It does. So we are a startup. We are now into the mode of scaling up the business and scaling up the impact part of it. So we started from what we call traceability which is from the source to the final garment and now we are also working towards trackability which is about after the good has been purchased from the store and with the four Rs which are involved, which is Repairability, Recomposability, Recyclability and Reusability part of it. So as a company we are investing into that space. We are running around three innovation projects in the space of circular business models. In that case the idea is that we are able to create a closed loop system which is called textile to textile. So where the source and reduce the pressure on virgin fibres through this whole equation there. So it starts by putting a digital passport at a product level and then you know the unique bill of material of that particular product, where the product has come from, what is the component it is made out of, whether it is made out of polyester or recycled polyester or whether it is made out of responsible wool or not.
And then when it reaches to the end of the cycle you are able to reuse that and reduce the virgin fibre. During the usage cycle - and we are very poor in that - typically, if you see the number of times a garment is worn nowadays has reduced by almost 80% in the last two decades. So typically, if you buy a garment, would have bought a garment somewhere around the 90s, you typically would be wearing it much more times. So the utilisation of the government is much higher before it is disposed off. Right. In the current world, we tend to wear it fewer times, which is like maybe 80% the statistics itself that you only wear instead of 100 times, 20 times. Right. So now there is a significant amount of value which is lost in the usage in the years that it is sitting in the wardrobe. Right? So consumers need access to second hand marketplaces or ecommerce opportunities. They may not want to buy the product they may want to subscribe it. We do not play in those areas. But what we do is that we provide a very important ingredient, which is called the digital passport of the product.
So again this digital passport, you know the full story of the product before that, how it has been made, where it has been made, plus where it would have been used. Also there. And through this mechanism, you are able to improve the usage or the number of times you wear the garments through different marketplaces, which is what I call recommercing of the government and not letting it decay in your wardrobe.
Anthony Day (15:00)
So this digital passport is this is something which is available to the consumer. Is it a barcode or a QR code or something?
Shameek Ghosh (15:08)
Yeah. So there are various digital passport companies which are existing. We also have our own QR code. It can be a QR code, it can be an RFID tag, it can be an NFC, depending upon what kind of garment it is. Right. If it is, for example, if it is a shoe, then, of course, you can also put a chip inside it kind of a thing. But if it is a fast fashion or a high street fashion kind of a product, you typically put a QR code along with the care label and all that kind of thing. There are various technologies and then there are various digital passport standards. In fact, European Union is promoting digital passports across not only fashion, but across all different products, like from bad tree to food to various equipment that are sold in the market.
Far to Go?
Anthony Day (16:00)
But as I said, to start with, there's been a lot of criticism and a lot of concern about the fashion industry. Clearly, you have got a range of tools to overcome those problems. How far, though, has the fashion industry moved towards sustainability? How much more is there to do?
Shameek Ghosh (16:21)
There's a lot more to do. To be very frank, Anthony. I think what we have started is that we, as of now, have got around 45 brands who work with us. Of course I'm not always saying that all brands have to work with TrusTrace. There are other traceability solutions also but very important is that they should take a step forward towards traceability because you cannot achieve sustainability without traceability. You need to know where our products are made, how it is made, who is making it and you have to take an action, continuous improvement, kind of a view of your supply chain there. So having said that, 45 brands is still sizeable but it is small, right, compared to the thousands of brands that are existing. The way we are approaching this whole problem is that we are trying to increase the impact that TrusTrace is able to do. So we have started with 45 and now we are moving towards more and more brands and we have segmented the market into three key segments. We work a lot with the sports and outdoor fashion world like companies like adidas, like Decathlon like Flippa K and all.
They are ahead of the curve in many cases. And now we are of course expanding geographically into US and other countries as we go after that segment. The second segment is the fast fashion or high street fashion. We have got a couple of recent wins in that space and we believe that is a very big polluter in the industry and we can start bringing changes to that. The third segment where we have just taken the first step is the luxury goods segment. They're also dealing with many cautious materials like leather and all and I think we need to also bring the change into that world. So some segments are ahead and we are trying to strengthen and making them as a good example. The other segments are catching up and our intention is to help all of them to make a significant leap at least by 2025.
Anthony Day (18:37)
So things are moving in the right direction. Although there is a way to go.
$3 trillion Industry
Shameek Ghosh (18:41)
There's a long way to go. It's a $3 trillion industry. It cannot happen and whatever mess has been created over four to five decades cannot be undone in a couple of years. But I strongly believe that if the actions are taken in the right direction, we can make the things much better in the next five to six years.
Anthony Day (19:06)
Shameek Ghosh. Thank you very much for explaining all this to the sustainable futures report.
Shameek Ghosh (19:12)
My pleasure, Anthony. Thank you.
Thanks to Shameek Ghosh of TrusTrace.
And thanks to you for listening and to all my patrons for their support.
If you’re in the UK I hope you get an opportunity to enjoy the extended holiday weekend coming up. There’s no Sustainable Futures Report on Friday but there will be another Wednesday Interview next Wednesday.
That was the Sustainable Futures Report.
I’m Anthony Day.
See you then.
More at https://trustrace.com